October 19, 2010

Customers embracing Vblocks, but VCE sales harmony a work in progress

Skepticism was my first reaction upon hearing about the Virtual Computing Environment coalition (VCE). I’ve worked with a couple of large IT organizations where the compute, network, application and storage teams have never met. I’ve visited many other firms where the different teams know each other, but don’t get along. It seemed to me unlikely that these groups would agree to purchase a single solution set from Cisco, EMC and VMware. The typically dissimilar purchasing and depreciation cycles of the various VCE components would further amplify the resistence. Much to my surprise, customer demand for Vblock appears robust. On the other hand, some synchronization challenges are impacting the manufacturer side of the selling equation.

Vblock Customer Appeal

The VCE coalition, announced in December of last year, delivers Vblock infrastructure packages while Acadia, a joint venture funded by Cisco, EMC, VMware and Intel, “…was established to help partners and customers accelerate the transition to pervasive virtualization and private cloud.” Vblock sales numbers are not publicly available but both Rob Lloyd, Cisco SVP Worldwide Sales, and Joe Tucci, EMC CEO, have stated that VCE/Vblock activity is well beyond expectations. One positive indicator is the hundreds of recent requisitions for Vblock related positions at Acadia and EMC. Another is the credibility brought when former Compaq and First Data Corp CEO, Michael Capellas, joined Acadia as CEO this past May.

VCE members are overcoming data center politics by pitching Vblocks to the IT leadership level rather than to the individual IT groups. The CIOs are then driving the sales internally, encouraging and coordinating functional team acceptance of Vblocks regardless of previous brand and model preferences. CIOs grasp the bigger picture perspective of virtualization as the underpinning technology for private clouds and as the key to transforming the way that IT provides services to business. They understand that stack infrastructures are pivotal to enabling both rapid and successful pervasive virtualization.

The stack consolidation plays of manufactures such as Oracle, IBM and HP have also helped to increase receptivity to the VCE coalition. Vblocks allow CIOs to continue working with independent manufacturers while also enjoying the benefits of a preconfigured, certified solution that is quickly acquired, set up and integrated with existing systems – and which is supported as a single product. The icing on the cake is both the inclusion of management tools such as Ionix Unified Infrastructure Manager (UIM) as well as the lowered cost of implementation and operation.

Sales Incentive Challenges

It’s safe to say that the three VCE parties entered into the arrangement with eyes wide open. During the VCE announcement, Cisco’s CEO, John Chambers, remarked that IT coalitions have a lower success rate even than acquisitions. But the VCE challenges that have arisen thus far appear to have more to do with education and with incentive and logistics adjustments than with onerous partnership roadblocks.

Misaligned quarter endings between Cisco and EMC, for instance, can result in the former just ramping up the selling process while the later is desperately trying to close business. But anyone who has dealt with EMC reps knows that these folks are not, let’s say, exactly happy-go-lucky when it comes to meeting their quotas.

EMC reps receive a significant uplift against quotas for Vblock sales while Cisco reps receive spiffs. VMware reps not only receive no additional Vblock incentives, they also are commonly under a misconception of a negative commission impact when VMware products are sold through VCE. Not surprisingly, EMC drives the majority of Vblock sales today, followed by Cisco with VMware a distant third. Despite the spiffs, Cisco reps appear far more interested in selling UCS than entire Vblocks.

Another difficulty facing the VCE sales reps is discounting. A single manufacturer such as IBM or HP has the flexibility to discount any component they deem to be particularly price sensitive knowing they can make up the lost margin on other components. The VCE players, of course, don’t have this option which can detract from the goal of a seamless and unified presentation of the unified stack.

The virtualization channel is also a bit wary of VCE/Acadia. A Vblock partner recently told me that while on a joint sales call, the EMC rep encouraged the customer to use Acadia for the Vblock implementation rather than his company. Acadia’s ability to bundle Vblocks with common channel services such as racking/stacking and cabling may also lead to conflicts.

FrankenBlocks

A potential pitfall of multiple manufacturers offering an integrated virtualization stack is how to accommodate inevitable customer requested scope changes while ensuring that a Vblock stays a Vblock. The three VCE manufacturers have addressed this issue by putting in huge efforts to develop a common reference architecture that provides enough flexibility to avoid reversion into a FrankenBlock.

Ironically, some of the competing single-manufacturer infrastructure stacks may lack this degree of forethought and flexibility. I’ve written, for instance, about the potential obstacles to simply applying a software patch to one one of the 16 software products comprising the HP BladeSystem Matrix.

Another problem with which VCE initially struggled was providing timely and organized delivery of the many different components from the different manufacturers. This difficult logistics issue is being resolved with an EMC manufacturing facility in Franklin, Massachusetts that has been retooled to just fulfill Vblock orders. A similar facility is being set up in Europe.

Vblock Market Opportunity

The Register reported this past May that, “The VCE founders think the total market for private cloud infrastructure, including the element that can be addressed by the VCE coalition, will be $85bn by 2015.” In order to realize the Vblock full potential, the coalition members will need to continue fixing the incentive and logistical challenges. They should also address the marketplace confusion about where VCE leaves off and Acadia begins, as well as the channel apprehensions about working with Acadia.

The close partnerships between EMC, Cisco and VMware bode well for overcoming these issues as well as more substantial ones that may yet still show up as the coalition expands. Whatever these challenges may be, they should be be vastly overshadowed by the opportunities realized from allowing customers to quickly and efficiently complete their private cloud infrastructures. With Vblock as the architectural foundation, access to all applications whether physical, virtual or SaaS is enabled by simply connecting to a private cloud.

Author Disclosure: I work for a leading Cisco/VMware partner which recently became Vblock certified.

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2 Responses to Customers embracing Vblocks, but VCE sales harmony a work in progress

Just as another proof-point to highlight what customers can expect when interacting with the VCE Coalition, this video and write-up talk about the PoC capabilities that VCE is offering for potential Vblock customers. These are being used to show not only the infrastructure of Vblock, but live applications (Exchange, SAP, Oracle, View 4.5, DR, etc.) and management capabilities.http://wikibon.org/blog/vce-coalition-delivers-real-data-proof-of-concept-capability/